Software is officially a rip-off in Australia, So what can you do?

analysis It’s official: Australia isn’t the “lucky country” in the IT sector. Consumers, government and industry down under are charged typically 50% more for software and hardware compared to their American counterparts. Why is this the case and, more importantly, what can affected customers do about it?

On Monday, after a year-long investigation, the House of Representatives Standing Committee on Infrastructure and Communication finally reported on the state of IT pricing in Australia. Microsoft products are typically 66% more expensive and Adobe products typically 42% more expensive than in the USA. Even hardware is more expensive, with a typical markup of 46% above American prices.

In March this year, the Australian House of Representatives committee took the unusual step of summoning representatives from Apple, Microsoft, and Adobe to explain these huge price differences. Their explanations were quite weak, to say the least. Apple blamed local copyright holders, and Microsoft said prices were set and consumers could vote with their wallets and search for the best price where ever they could find it.

represents a landmark in improving Australia’s trade and investment relationship with the world’s largest and richest economy, and most significant merchandise and services exporter and importer.

With this in mind, you might think these massive IT price discrepancies must be illegal – but sadly, this is not the case. The Australia-US Free Trade Agreement does not set prices for goods and services provided by private parties. In addition, Australian law supports price discrimination via the Copyright Act and the Competition and Consumer Act.

There was sufficient consumer outrage that the federal parliament undertook the IT pricing inquiry which has now recommended laws be changed to allow consumers to shop around for the best price anywhere in the world. Two recommendations are:

Recommendation 9: The Committee recommends that the Australian Government consider enacting a ban on geo-blocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Consumer Act and the Copyright Act recommended in this report.

Recommendation 10: That the Australian Government investigate the feasibility of amending the Competition and Consumer Act so that contracts or terms of service which seek to enforce geo-blocking are considered void.

In past years consumers could import goods themselves even if it was technically illegal, but recent advances in technology allow vendors to block both purchase of and operation of products based on the computer’s IP address, which is linked to the country where the computer sits. Credit card numbers can also be linked back to a country so it is possible to block purchases made by credit card. The ability of vendors to “geo-locate” means they can enforce any pricing structure they want.

Is it possible to work around these barriers for Australian purchasers to get the same prices as Americans?

It may be possible but warranties may be voided, and it may be impossible to get software updates and security patches. Some purchasers try to purchase from retailers rather than the parent company. Many retailers just want to make money and will “forget” about rules such as not selling overseas, or checking the student status of the purchaser.

Another approach is to work through a proxy server. Proxy servers act as intermediaries between computers, and make it look like a computer is in the same country as the proxy server. For example, connecting from Australia to a proxy server in America which will make it look like the user resides in America.

Virtual private networks (VPNs) also reroute a computer’s network internet connection and change its IP address, but they provide an encrypted “tunnel” so anyone checking out your online activities can only see that you have connected to the VPN server and nothing else.

Software purchased from the US can also be run “in the cloud”. Using a cloud provider which looks like a US cloud causes US-bought software to happily think it’s in the US, and run properly.

A left-field approach may save a lot of money and is entirely legal: give up on expensive proprietary software and look for alternatives including free open source products.

Consumer pressure can dramatically affect how the big vendors work. Microsoft used to charged high prices for commercial use of its Internet Information Server (IIS) web server. But the free Apache web server was so good that Microsoft had to significantly reduce its price. If enough of us start using open source products then the big manufacturers such as Microsoft will be forced to be more reasonable with their pricing.

There are some excellent free alternatives for many expensive packages. For example, a full professional Microsoft Office suite will cost you between $500 and $800 dollars. The Open Office package is rated as just as good by many reviewers and is totally free. Personally, I know several small business owners who use Open Office throughout their enterprises. It has worked very well and saved them tens of thousands of dollars.

Even governments are now looking at open source products to reduce costs, and put pressure on the big manufacturers to reduce prices. The UK government has clearly indicated a preference for open source software. Given the huge savings to be made, other governments may follow this lead – and maybe we should too.

Pj Radcliffe does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. This article was originally published at The Conversation. Read the original article.

13 COMMENTS

The sooner people call Microsoft’s bluff and start voting with their wallets the better. Per this article open source software is a very viable option here. I have used OpenOffice in the past and currently use LibreOffice. Both office suites are very powerful and very capable alternatives to the expensive proprietary products, even for some of the relatively complex spreadsheets I use. Also I use Gimp for photo editing and again it is very powerful, meeting all my needs. If a significant number of people go this way firstly they will save significant money and secondly the likes of Microsoft/Adobe/Apple will be forced to act. They may not do so based on the recommendation of a House of Representatives Standing Committee but they will if the movement to open source sofware gather pace. Market forces can be very powerful.

people did vote with their wallets, the surface RT was a 1 billion dollar failure.

some of the suggestions in this article are terrible, using anonomous proxies and vpn tunnels, open you up to man in the middle attacks, you might save money on the software you buy, but you wont save much on the stolen cash from your credit card.

Except, because some of my favourite games are now quite old, Windows 64bit refuses to run them… Open source to the rescue, in the form of WINE.
We have four PCs in the house. Only one of them runs Windows…

Personally, I think if governments employed small IT firms rather than the big multi-nationals, they’d get a lot more bang for their buck. Governments though want zero risk for projects. They’d rather spend 300 million on a “successful” rammed through project, rather than risk 1 million employing a tech savvy but small IT shop.

Another approach is to work through a proxy server. Proxy servers act as intermediaries between computers, and make it look like a computer is in the same country as the proxy server. For example, connecting from Australia to a proxy server in America which will make it look like the user resides in America.

I think it might be fair to point out here that most computer software is not sold, but is leased. Therefore, even if you are just a little bit in breach of the license, legally you are a pirate and the fines if you are caught are seriously punitive. There’s a good chance you won’t get caught, but there’s also a realistic chance you will get caught. If you ever want to buy a house, or have super money that pays out, or you want to retire and not be in poverty, then you should be thinking about these implications.

Then again, if you do decide to put on the black mask of Zorro and stand up and fight, might as well just torrent the whole box and dice, don’t even pretend to be a real customer. It is still illegal of course, but then again using a proxy server is also illegal and the torrent server is cheaper. Who do you guys think you are fooling by being a half pirate?

I got fed up with the price of software last year after my PC (which was out of warranty) had an issue that required a fresh install of WIndows. Having bought my PC from a large retailer, it was pre-loaded with windows, but did not come with a Windows disc. So staring down the barrel of having to spend $200 odd dollars, I chose to give Linux a try. I installed Ubuntu and never looked back. It came with everything that I needed for a fully functioning home PC – office suite, photo editing, web browsing and multimedia. The best part is its all free, and is just as functional and easy to use as any of the expensive proprietary operating systems.

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